What is NFC and Why is it in your Phone?
TechRadar's Jamie Carter describes the following scenario. Your credit cards: gone. Bus pass and train tickets: vanished. Those dog-eared loyalty cards for high street coffee shops: binned. You've been the victim not of theft, but of the future – a future where the wallet, purse, paper ticket and pocket have all gone digital and live solely on your phone.
This is Near Field Communications (NFC), a contactless communications technology that could very likely already be in your smartphone. The technology is simple. It's a short-range, low power wireless link evolved from radio-frequency identification (RFID) tech that can transfer small amounts of data between two devices held a few centimeters from each other.
Unlike Bluetooth, no pairing code is needed, and because it's very low power, no battery is needed in the device being read. By tapping your phone on a contactless payment terminal in a shop, train station or coffee shop is able to identify your account (and even your personal preferences, shopping habits and even your most frequently travelled route home) and takes payment through an app on your phone.
Passive NFC 'tags' on posters, in shops and on trains could contain a web address, a discount voucher, a map or a bus timetable that passers-by could touch their phones on to receive – or to instantly pay for absolutely anything.
"The SIM card in your mobile phone is a smart card identifying your account to the network," says John Elliott, Head of Public Sector at Consult Hyperion, who's worked on the Oyster Card. "On NFC phones, the SIM is being extended to act as the Secure Element that can hold other apps such as payment cards." Those with NFC smartphones on Orange can already 'pay 'n' wave' on Stagecoach buses
NFC is starting to become established in the UK. Orange's QuickTap scheme allows purchases of £15 at 50,000 shops in the UK (including Pret a Manger, EAT, Little Chef, Wembley Arena, Subway, Wilkinson and McDonalds) just by tapping a phone, though only from NFC-enabled phones hosting an app that has been topped-up with credit from a Barclaycard, Barclays debit or Orange Credit Card.
"Feedback from our customers on the QuickTap NFC service has been extremely positive," an Orange spokesperson told us, "with their usage and average spend higher than expected." Orange is also running a trial of mobile ticketing with Stagecoach earlier this year and expect this to expand in 2013.
"As well as payments, customers have told us they expect their loyalty cards and vouchers to be included in Quick Tap so we are working with retailers to make that happen, following up on our Treats from EAT offer." In the latter, anyone with an NFC-compatible phone on the Orange network could tap their mobile phone on specially designed posters at any of EAT's 110 outlets to receive a free treat each day.
Meanwhile, Blackberry smartphones with NFC have been trialled as digital keys, using identification data to open secure access systems in office blocks and networks.
Smart cards like Oyster could will be considered clutter once NFC gets started [Image credit: TFL]
Are there any alternatives to NFC?
Yes – and there are plenty within it, too. One debate in the mobile and finance industry is between the 'mobile wallet' as represented by NFC, or the 'digital wallet'. Calling NFC 'a technology, not a strategy,' PayPal's Kerry Wong, MD for Hong Kong, Korea and Taiwan, promotes the latter.
"The 'digital wallet' exists in the cloud, and it is not tethered to one specific device such as a mobile phone, but accessible from a variety of devices such as laptop, iPad, ultrabook or even Xbox," she says. Wong thinks that it's the ability to work easily, safely and on any device or platform that will win the day.
By Jamie Carter January 16th 2013